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Analyst: Intel's MID move may not be worth it

Posted: 19 Oct 2009 ?? ?Print Version ?Bookmark and Share

Keywords:Intel MID? processor? Atom? mobile Internet device?

The Intel Atom processor is being redesigned as a SoC in an effort to win the mobile Internet device (MID) market. The SoCs will be manufactured by Taiwan Semiconductor Manufacturing Co. However, the investment may not be economically viable, according to the report Intel Versus ARM in Mobile Devices and Netbooks/Smartbooks by market research company The Information Network.

At the 2009 Intel Developer Forum, Intel demonstrated how serious it is about pushing its Atom-based SoC platforms into an increasing number of consumer product categories when Paul Otellini, CEO, Intel predicted "a future where Intel ships more SoC cores than standard PC cores." The company has more than a dozen 32nm SoCs in development using the Atom core and a common set of libraries and interconnect models, he said. They will be manufactured by TSMC.

"Is all that investment by Intel going to pay for itself? Just how big is the market for MID anyway?" asked Robert Castellano, president of The Information Network. "It's all in the definition and there are varying definitions of MID. We used a more-or-less industry-wide definition in which a MID as a portable device with an always-connectable Internet or area network connectivity, a maximum display of 8-inches in the diagonal dimension, and a full day's worth of battery life under typical usage scenarios. We guess that the entire MID market is nearly all smart phones."

The Atom SoC design puts the graphics processor and memory controller on the same die as the processor core, so the selling price will probably be in the $45 range instead of the $29 Atom CPU. Assume Intel makes a profit of $10 on each SoC. That would give them a profit of $77.5 million in 2010 or $19.4 million per quarter for the non-smart phone MIDs, assuming they have a 100 percent market share.

In Q2 09, Intel reported a profit of $1.6 billion. The additional $19.4 million profit would represent just 1.2 percent of the company's profits.

ARM has a lock on the smart phone market and now MIPS Technologies is entering that market with its RISC-based processor (ARM is also RISC-based). It will be difficult for Intel to make an impact in smart phones even if its 32nm Medfield SoC went into Nokia's smart phones.

"Of course if we broaden the definition of a MID, the market forecasts would be higher and represent a greater market potential for Intel," added Castellano. "Handheld devices we considered as MID were e-readers, game consoles, portable media players and GPS devices. Newer product categories will also amplify the market potential."





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